Earnings plays and a catch-up trade in transports

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Earnings plays and a catch-up trade in transports

(This is a wrap-up of the key money moving discussions on CNBC’s “Worldwide Exchange” exclusive for PRO subscribers. Worldwide Exchange airs at 5 a.m. ET each day)

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Investors are waiting for the Federal Reserve meeting Minutes at 2 p.m. ET and looking ahead to big bank earnings later this week kicking off third-quarter reporting season.

Worldwide Exchange Word of the Day: Earnings

Stephanie Link of Hightower believes Q3 earnings will be better than LSEG estimates of a 5% increase year over year; seeing potential for an 8-10% increase.

Link said:

“That’s tied to a better economy, Atlanta Fed tracker is running at 3.2%… that’s very good for earnings. In addition you have a very good consumer and you pockets of the manufacturing sector that are seeing a renaissance.”

Best Q4 Ideas: Amazon     

Bill Baruch of Blue Line Futures says

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is his top stock pick for Q4, citing that the stock is down more than 1% over the last 6 months. Baruch also noted a pullback in valuation from a roughly 116 forward price-earnings ratio in July 2020 to a roughly 33.5 forward P-E today, according to Factset.

“This gives it some room to outperform in the final quarter,” Baruch said on Worldwide Exchange. “I’m looking at it as a relative value play.”

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was downgraded by Wells Fargo and Wolfe Research recently citing rising competition in both it’s cloud and online marketplace business. Baruch countered: “I like to see the negativity. If the negativity is already out there, it gives the potential to beat or maybe even a lot of it already priced in.”

Chart of the Day: Dow Transports

The

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is basically flat year to date while the S&P 500 has gained more than 20%. According to a new Citi note on Wednesday that is the largest gap between the two indices since the late 1990s tech bubble. The firm believes that spread has to narrow at some point.

Citi analysts initiated coverage of 19 Transports stocks saying in part, “…we believe select Transportation and Logistics stocks are well positioned to deliver strong relative outperformance in the year ahead.”

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#Earnings #plays #catchup #trade #transports

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